Pollution will decrease when firms are forced to internalize externalities as a production cost.

Question

Quizplus · Accepted Answer

When firms are forced to internalize externalities (such as pollution) as a production cost, they will be incentivized to reduce their pollution output in order to minimize costs. This can be achieved through means such as investing in cleaner technology or implementing more efficient waste disposal methods. As a result, pollution levels will decrease.

Pollution Will Decrease When Firms Are Forced to Internalize Externalities